Hong Kong Water Contract Scandal Exposes Procurement Failures and Deepens Public Distrust

A HK$52.9 Million Contract Becomes a Crisis of Confidence

A HK$52.9 million (US$6.8 million) contract to supply bottled water to Hong Kong government offices has unravelled over false documentation and water obtained from an unapproved manufacturer. About 30,000 bottles had already been distributed before supplies were impounded, turning a government purchasing decision into a controversy over public health, official oversight and taxpayers' money.

As of August 22, 2025, the contract with Xin Ding Xin Trade (XDX) had been terminated, the married couple behind the company had been arrested, and officials had launched a broad review of procurement procedures. Subsequent tests showed that water from all suppliers met safety standards, while questions about the tender and the government's checks continued.

The deal covered government offices on Hong Kong Island and the outlying islands. It formed part of the government's first decision to use mainland Chinese suppliers for these bottled water contracts, with expected savings of more than HK$16 million a year across three agreements.

XDX, a company based in Hong Kong, was supposed to supply water bottled by Robust (Guangdong) Drinking Water, a major mainland brand. Instead, it obtained water from another supplier in Dongguan and used false documentation to secure the contract. The substitution amounted to a breach of contract and possible fraud.

The controversy brought together several concerns: whether the water was safe, whether officials had properly checked the supplier, and whether the contract represented good value. For employees drinking the water and taxpayers paying for it, those concerns required different answers. Testing addressed water quality, while the investigation and procurement review addressed how the purchase had been approved and managed.

How the Dispute Unfolded

Concerns emerged soon after the contract was awarded. Questions about the water's safety and origin circulated publicly and among civil servants, some of whom began bringing their own drinking water to work. Their unease reflected both doubts about the new arrangements and mistrust associated with earlier safety violations involving Robust and other mainland suppliers.

The discovery that XDX had obtained water from a manufacturer other than the one named in its bid escalated the dispute. Officials were dealing with a supplier whose documents and deliveries did not match the basis on which it had won government business.

The main developments described by August 22, 2025, were:

• In summer 2025, controversy developed around the HK$52.9 million XDX contract for Hong Kong Island and the outlying islands.
• After the award, concerns about safety and origin grew, and some civil servants began bringing water from home.
• Authorities discovered that XDX had sourced water from another supplier in Dongguan rather than Robust, using false documentation to win the bid.
• Government contracts with XDX and related firms were terminated, and the married couple behind XDX were arrested.
• Replacement supplies were arranged, water testing found that supplies from all suppliers met safety standards, and a procurement review was launched.

The criminal inquiry and the administrative review were continuing as of August 22. Investigators were examining suspected wrongdoing, while officials were assessing why the government's purchasing procedures had failed to detect the problems before deliveries began.

Arrests and Contract Cancellations Spread Beyond Water

Lui Tsz-chung and Chan Pik-lam, the married couple behind XDX, were arrested on suspicion of fraud and providing false information. Police also linked them to a separate fraud case from 2022.

Police and customs authorities were working together on the investigation and had not ruled out further arrests. Some companies under scrutiny shared office addresses or had overlapping directors and shareholders, extending the inquiry beyond the bottled water agreement.

The government terminated all contracts with XDX and related firms. Those cancellations included agreements for chemicals and data entry services worth millions of Hong Kong dollars, showing that the consequences reached other areas of public purchasing.

Officials also announced that they would deduct a HK$1 million deposit from XDX to recover losses and reserved the right to pursue further legal action. The government was considering recovery of additional losses from XDX and associated companies.

Replacement Water and a Wider Government Review

The Government Logistics Department (GLD) and other agencies moved to replace the suspect supplies. AS Watson, a familiar local brand, was brought in to provide water temporarily to affected offices.

Christopher Hui, secretary for financial services and the treasury, acknowledged procedural inadequacies and established a task force to review government procurement. Procurement is the process public bodies use to select suppliers, agree prices and purchase goods or services with public money.

The Audit Commission was invited to scrutinise the tender. Multiple government bureaus and the Department of Justice were also involved in a comprehensive review, bringing the purchasing process, contract management and legal issues under examination.

The task force was expected to deliver preliminary recommendations within three months. Its work was to focus on due diligence, contract management and quality control. Due diligence means checking that a bidder's claims, qualifications and business arrangements are genuine before relying on them.

The government pledged to make the review findings public. For offices receiving replacement water, the immediate change was a new temporary supplier. For departments buying goods and services, the larger issue was whether the review would produce stronger checks before contracts were awarded and throughout their delivery.

What the Tender Documents Reveal About Oversight

The government released 229 pages of tender documents in an effort to increase transparency. The documents showed that evaluation covered sample quality, delivery arrangements, certification and production capacity.

Those categories addressed practical questions: whether a sample met requirements, whether a company could supply enough water and whether it could deliver as promised. The controversy exposed weaknesses in how officials verified the information submitted under those headings.

The GLD relied heavily on documentation supplied by bidders. The purchasing system also depended on companies declaring professional misconduct or prior convictions themselves, while the principle of accepting the lowest bid often prevailed.

XDX submitted forged or misleading documents that went undetected until after the contract had been awarded and water delivered. Lawmakers, civil servants and members of the public questioned how those documents passed the government's checks and why officials had not verified the company's claims more thoroughly.

Director of Government Logistics Carlson Chan apologised for his department's oversights and acknowledged that officers had failed to detect forgeries in time. He said:

There were inadequacies in procedures and I apologize on behalf of the Government Logistics Department,

Chan promised a thorough review of systems and staff training, with greater vigilance and improved contract management intended to prevent future scams. His response addressed both the rules governing purchases and the work of staff responsible for applying them.

Why the Bottle Prices Attracted Attention

The expected saving of more than HK$16 million annually applied across three water supply agreements. Within those arrangements, the XDX contract attracted attention because its price exceeded the prices under the other winning tenders.

XDX's water cost more than HK$28 per bottle. The winning tenders for government offices in Kowloon and the New Territories offered prices of HK$23.80 and HK$26 per bottle, respectively. Using those figures, XDX's price was more than HK$4.20 above the Kowloon price and more than HK$2 above the New Territories price for each bottle.

A Bluesky user posting as @langley127.bsky.social drew attention to the comparison in these words:

One particularly troubling detail is the cost of the Xin Ding Xin Trade contract: at over HK$28 per bottle, it was significantly more expensive than other winning tenders for government offices in Kowloon & the N.T., which offered bottled water at HK$23.80 & HK$26 per bottle, respectively

The difference fuelled suspicions about the criteria used to award the XDX contract and whether the purchasing exercise delivered the savings taxpayers had been promised. Officials therefore faced questions about both the authenticity of the supplier's paperwork and the value obtained under the agreement.

The tender documents listed several evaluation factors beyond price. Explaining how those factors were assessed, and how the winning offer was checked, became central to accounting for the decision.

Safety Tests Meet a Legacy of Distrust

Tests conducted after the controversy showed that water from all suppliers met safety standards. By then, around 30,000 bottles had already been distributed before being impounded, and concern among staff had spread.

Robust, the manufacturer originally named in the XDX contract, had previously violated safety standards. News that another supplier, Dongwa, had produced water with excessive bacteria levels in 2023 added to anxiety among civil servants and the wider public.

Those incidents fed an existing mistrust of food and beverages from mainland China. Past cases involving tainted milk, contaminated food and substandard consumer goods had made some Hong Kong residents wary of products from across the border.

Some government employees questioned the decision to switch to mainland suppliers. Others voiced their concerns on social media or said they were taking their own water to work. A purchasing decision intended to save money had changed a routine part of the working day for staff who no longer felt comfortable using office supplies.

Legislator Doreen Kong argued that the central issue was compliance with procurement procedures and the integrity of the process, rather than where the products originated. Her position focused attention on whether the government had checked the companies and goods it was buying.

Local Brands Respond to Public Anxiety

Watsons Water and Swire Coca-Cola, which produces Bonaqua, promoted their products as safe and trustworthy alternatives as the controversy grew. Their campaigns reached an audience already discussing water quality and the origin of government supplies.

Watsons Water highlighted its filtration and distillation processes. Bonaqua stressed local production and compliance with international safety standards. Both approaches addressed the public's desire for reassurance about what was in the bottle and how it had been produced.

The marketing generated unusually high engagement on social media and reinforced a preference for local brands during the crisis. Alongside AS Watson's temporary supply role, the campaigns gave familiar brands a prominent place in the response to the failed contract.

The commercial reaction reflected the same concern visible among government employees: confidence depends on knowing who made a product and trusting the checks behind it. In this case, the mismatch between the manufacturer named in the contract and the actual source of the water made that concern especially immediate.

Public Money and Accountability Remain Central

Lawmakers called for stricter vetting of bidders and stronger background checks. Civil society groups were also watching the review, seeking lasting changes alongside action over the failed contract.

The GLD faced scrutiny over its reliance on bidder documents, its handling of declarations about misconduct and convictions, and its monitoring once deliveries began. Those issues connected the award stage with later contract management: officials needed accurate information when choosing a supplier and reliable checks that the agreed goods were actually arriving.

An editorial addressing the controversy framed the stakes in terms of procurement integrity and public accountability:

At stake is not just the integrity of the procurement mechanism, but also the proper use of public funds and accountability,

The editorial also called for a prompt response to unresolved concerns:

The authorities must fully address all queries and inadequacies as soon as possible.

The government's release of the tender documents and promise to publish review findings were intended to restore confidence through greater transparency. Officials also promised stronger due diligence, better contract management and improved quality control in future purchases.

The immediate replacement of water and the review were welcomed, while demands continued for more fundamental reform. The controversy had become part of a wider debate about governance, transparency and Hong Kong's relationship with mainland China.

What Comes Next for the Investigation and Review

The criminal investigation remained active on August 22, 2025. Police and customs authorities were examining XDX and its directors, with further arrests still possible. The government was also considering additional recovery of losses from the company and related businesses.

The next stated policy milestone was the task force's preliminary recommendations within three months. No exact publication date was given. The review was expected to address the warning signs missed during due diligence, the management of contracts and the controls used to check product quality.

For taxpayers, the outstanding financial issues included the government's planned HK$1 million deposit deduction, any further recovery action and an explanation of the contract's value. For civil servants, the response centred on replacement supplies and confidence in the water delivered to their offices.

The authorities had committed to making review findings public. Their response would be judged against the specific failures exposed by the case: false documents passing checks, an unapproved manufacturer supplying water, and problems being detected only after the contract had entered operation.

Key Points

• A HK$52.9 million contract with Xin Ding Xin Trade covered bottled water for government offices on Hong Kong Island and the outlying islands.
• XDX obtained water from another supplier in Dongguan instead of Robust, the manufacturer named in its bid, and used false documentation to secure the contract.
• About 30,000 bottles had been distributed before being impounded. Subsequent tests showed that water from all suppliers met safety standards.
• Lui Tsz-chung and Chan Pik-lam were arrested on suspicion of fraud and providing false information. Police linked them to a separate 2022 fraud case.
• Contracts with XDX and related firms, including chemical and data entry agreements worth millions, were terminated.
• AS Watson provided temporary replacement supplies, and the government announced a planned HK$1 million deposit deduction to recover losses.
• The government released 229 pages of tender documents and launched a review, with preliminary recommendations expected within three months.
• As of August 22, 2025, criminal inquiries, possible further recovery action and demands for stronger procurement checks were continuing.