HK's new leader unveils sweeteners to pacify angry public

HONG KONG (Reuters) - Hong Kong's embattled new leader, Leung Chun-ying, announced a series of welfare measures on Monday and pleaded for time to deal with scandals that have rocked the city, including illegal structures in his own home.

Leung, hand-picked by Beijing to lead Hong Kong, was speaking in his first question-and-answer session in the city's Legislative Council since taking over two weeks ago.

"I am aware of the doubts by a lot of people on my political team and me." said Leung. "I hope you give the government space and time to do something real so we win trust and respond to the aspirations of the public."

The scandals have tarnished the city's reputation as a relatively corruption-free financial centre and made the public furious, creating a headache for China, which has been trying to maintain calm after the ouster of ambitious party elder Bo Xilai and ahead of the national leadership transition later this year.

Leung's tenure so far has been torrid. Last week, the billionaire co-chairmen of Sun Hung Kai Properties, one of the city's biggest developers, and Rafael Hui, the city's former chief secretary, were charged in a bribery investigation.

A day before, Leung's hand-picked development secretary, Mak Chai-kwong, was arrested in a separate investigation into the misuse of government housing allowances. Leung is himself ensnared in a scandal over six illegal structures at his HK$500 million ($64 million) home in the exclusive Peak district.

As Leung spoke in the legislature, maverick activist lawmaker "Long Hair" Leung Kwok-hung hurled an effigy of Pinnochio, the cartoon character prone to telling lies, at the new leader, missing him by a few metres.

The chief executive, the third person to lead Hong Kong since it returned to Chinese rule in 1997, was unfazed, maintaining a stoic expression throughout the 90-minute session.

Over 50 protesters gathered outside, holding placards and banners telling Leung to speak the truth.

"Leung Chun-ying: Liar" one banner proclaimed.

Tens of thousands of people protested when Leung was sworn in on July 1. Over the past two weeks, Leung has come up against protests during district visits, with people questioning his credibility and at one point chasing him out of a town hall meeting.

Praised as one of the world's freest and simplest low-tax havens for conducting business and a gateway to China, Hong Kong has nevertheless struggled over the past 15 years, with critics accusing Beijing of extensive behind-the-scenes meddling in political, electoral, academic, media and legal spheres.

Leung announced a string of sweeteners in a bid to appease a populace that is increasingly frustrated with a widening income gap and high living costs, including measures aimed at tackling poverty among the elderly and the housing needs of residents.

He promised that the monthly welfare allowance for low-income residents over 65 will be doubled.

Elderly residents will also see a doubling of healthcare vouchers allowing them to consult private doctors, in line with a larger plan to improve primary healthcare. Each year, 5,000 people with a monthly income of HK$30,000 and below will be allowed to buy subsidised flats in the secondary market.

Leung also promised to fix the illegal structures at his home.

"I have been seriously neglectful of this issue but I have not concealed any possible contraventions. In fact, they have all been dealt with swiftly, some of them have been removed in a day or two," he said.

Referring to the arrest and resignation of his development minister, Leung said the incident had given his team much to ponder and learn from, and he pleaded for patience.

"I and my team have been reviewing ourselves with humility. We should learn lessons from these incidents," he said.

Leung was selected in March by a committee of 1,200 of the city's elite, filled with Beijing loyalilsts. His main rival, Henry Tang, was seen as an early favourite of Beijing, but Tang's image was dented by revelations of a love affair and a scandal over illegal construction at his villa.

(Writing by Tan Ee Lyn, Editing By Anne Marie Roantree and Raju Gopalakrishnan)

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